Brazilian giant in high-stakes bid for NSW beef

The world’s biggest meat processor, Brazilian-owned JBS Swift, is bidding to buy the Rockdale Beef processing facility in southern NSW. The purchase, which could be worth more than $50 million, is being watched carefully – and not only because of concerns about foreigners buying up agricultural assets.

Rockdale is already owned by the Japanese, but the fact that the only bidder is a Brazilian multinational – which, if successful could control half the key beef cattle market in NSW – highlights the dominance of overseas competitors.

It follows the $1.75 billion sale of CSR’s Sucrogen, our biggest raw sugar producer and the world’s sixth-largest sugar company, to Singapore-based Wilmar International, a sale that is still under review by the Foreign Investment Review Board.

Rumblings over foreign ownership rules have politicians making defiant statements about the control of farms.

“I think we do want to sell the food rather than sell the farm," federal Opposition Leader
Tony Abbott
said recently.

Nationals senator
Barnaby Joyce
said: “We have always had foreign ownership in this country but now people are asking: is it too much?"

“Too much", he said, was when “you give the capacity to someone to affect commerce in a way which affects a fair return or fair participation for the Australian people".

Victorian Farmers Federation Livestock Group director Michael McCormack says his concerns are about JBS Swift’s hold over the market, not so much about foreign ownership.

Related Quotes

Company Profile

“It is a huge company and you need to ask whether they will ever go and buy part of Coles and control the chain of production. We just want to make sure it doesn’t become a monopoly and have too much control in the sector."

The Australian Competition and Consumer Commission will rule on the bid in two weeks, and one who has been in the ear of the ACCC is Senator
Bill Heffernan
.

He estimates that if JBS Swift is successful, it will control half the market in NSW.

“I’m of the view that the problem for farmers is not only the consolidation for retail but also the consolidation for meat processing," he said. “I’m of the view that JBS Swift can buy Rockdale but they would need to divest somewhere else, otherwise they might have too much market power in the feeder steer market and over the eastern young cattle indicator."

The indicator is a key measure of the beef price.

Still, the sale may help the industry, which is struggling.

The Burrangong Meat Processors owned by the Edmonds Group closed recently.

In Melbourne, lamb processor Castricum Brothers will stay closed until at least September, and on Queensland’s Darling Downs the Pittsworth and Killarney abattoirs have also closed.

The ACCC has noted some industry participants’ suggestion that if JBS Swift does not acquire Rockdale, it may have to close.

Industry sources estimate the added investment JBS Swift could bring to Rockdale at as much as $80 million, mostly for restocking.

“We have invested over $330 million in our Australian businesses over the last three years – that’s new money," Mr Mars said.

“We are very, very keen to buy businesses and look at businesses where we can add value as long as the regulatory authority allows us to do that."

At a JBS facility in Cobram, the plant is working five days a week instead of two or three days for about three months of the year.

“Some of our competitors have not had access to those funds and not had the courage of investment," Mr Mars said.

Some parts of the industry hope JBS Swift will invest more.

A deal for Rockdale could be struck on the basis of the company alleviating other structural pressures within the industry.

At a meat industry breakfast in Brisbane just over a week ago, cattle baron and former
Australian Agricultural Co
mpany director Peter Hughes asked Mr Mars about investment in other parts of the struggling industry.

“The northern cattle industry has one processing plant in Townsville and that’s it." he said. “I guess you would be working on that? I hope you are."

Mr Mars said: “We are looking to invest more in the Townsville operation."

As the director and manager of corporate and regulatory affairs for JBS Swift John Berry says that since 2007 when JBS acquired the Australian owned AMH the investment the company invested more like $450 million when it comes to all the ongoing maintenance including about $6million in government inspections each year.

AAco, the country’s largest beef producer, is 20 per cent foreign owned and reported a $12.2 million loss this week.